The Power of Digital Ecosystems
Achieving 10X growth in a new playing field without boundaries
Adopting a digital ecosystem strategy at the business and individual level can potentially bring about tremendous benefits.
The Globalisation of Systems
Digital ecosystems are the “globalisation” of systems whereby clusters of systems grouped by sectors and industries, e.g. travel, finance, food, social, etc. connect with each other to provide services across clusters.
Businesses can achieve significant growth from the successful execution of a digital ecosystem strategy.
Partnerships across ecosystems enable parties to tap into each others’ network of user bases to accelerate growth and adoption of services—thereby driving mutual value via the multiplier effect.
A New Playing Field — The Blue Ocean
Digital ecosystems change the playing field by creating new markets and blue oceans (B2B2C) for businesses to strategically collaborate, innovate and deliver new value propositions.
Examples of digital ecosystems and companies across sectors:
- Travel: Traveloka, Expedia, Airbnb, Uber, GoJek, etc.
- Finance: Mastercard, PayPal, Stripe, Alipay, etc.
- Food: Food panda, Deliveroo, etc.
- Social: Facebook, Instagram, TikTok, etc.
There are also platforms that connect with multiple diverse ecosystems to deliver new value propositions for their users through the entire journey. Some prime examples of the ecosystem marketplace:
- WeChat platform: Social messaging, medical, insurance, transport, shopping, food delivery, games, banking and insurance, etc.
- Grab platform: Transport, food, travel, delivery, financial services, etc.
Below is an illustration of the WeChat ecosystem.
You can see how the aggregation of services allowed WeChat to tap into the customer base of the movie theatres, insurance agencies, and healthcare companies, etc. which was previously unreachable.
New Value Drivers
Many companies today strive to become part of the ecosystem because that’s where the new values are. Below are three main value drivers for ecosystem aggregators and players:
- New monetisation and revenue models—players can charge others for using the platform or share revenue via chargeback models, etc.
- Increased personalisation through data—for platforms like Grab, a ton of valuable customer lifestyle data goes through them every day, providing useful insights via analytics.
- Innovation and speed to market—collaboration across sectors allows players to leverage each other’s key competencies and reduces the need to reinvent the wheel.
As an ecosystem grows, it creates a positive reinforcing feedback loop. Drawing a parallel to social media platforms, as the user base grows, new users are more likely to join as a result of the growth, which further increases the value of the platform to attract more new users.
When the feedback loop kicks in, the business gets harder to disrupt with its newfound unique value proposition—imagine trying to disrupt Facebook with another social media platform.
The Way Forward
To capitalise on this phenomenon to achieve rapid growth, businesses have to undergo digital transformation. Here are three steps (at a high level):
- Digitalise services and products — this can be done by adopting an API/microservices approach, whereby services and contents are digitalised and exposed as APIs for consumption.
- Package services and products strategically — repackage services and products in a way that is likely to add value to certain industries or partners as a start.
- Form strategic partnerships — reach out and collaborate with strategic partners to drive mutual value via sharing of packaged products and services.
At the individual level, the main difference lies in the scale and context, but the strategy is similar. Here are the three steps at the individual level:
- Digitalise service and products—this can be your blog posts, course tutorials, e-books, artworks, photography, etc. start creating digital content if you haven’t.
- Package services and products strategically—tailor your digital contents and services to specific/niche groups or purposes, e.g. entrepreneurs, educators, realtors, personal development, etc.
- Form strategic partnerships—reach out to potential “partner platforms” with your target user bases/groups, e.g. LinkedIn, Github, PropertyGuru, Udemy, Skillshare, Medium, Facebook, YouTube, etc. and share your digital services and products.
The Digitally Transformed Future
Digital is transforming the way things are done. We have to adapt via new strategies and approaches to stay ahead. Often, we can look for inspiration on how businesses are adapting, and apply it to our lives, or vice versa.
At this day and age where resources are readily available on the Internet to facilitate digitalisation and transformation, e.g. open-source technologies, learning platforms, etc. the barrier is significantly lowered. Most of the time, you just need to know where to look and take action.
In perpetual beta—playing at the intersection between digital technology and business.